Flybe told This is Money that there are no flight cancellations planned, adding that customers should not be concerned about any Flybe flight they have booked.

The airline said it was facing a number of 'challenges', including higher fuel prices, a weaker pound and uncertain demand.

On top of a potential sale, the airline said it was also reviewing other 'strategic options' in a bid to sort out its finances, including cutting flight capacity and costs. The airline also faces stiff competition from rivals including Ryanair and Easyjet

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The alert sent shares tumbling by more than a third on the day and nearly 75 per cent has been wiped off its stock market value since December.

Stobart Group walked away from a bid for Flybe in March after the two firms failed to agree terms for a deal.

But Stobart, which already has a franchise agreement with Flybe, could reportedly come back into the frame.

Half-year results published today reveal that Flybe's pre-tax profits fell by 54 per cent to £7.4million, while revenues fell to 2.4 per cent to £419.2million. Underlying pre-tax profits rose from £9.2million to £9.9million.

Data: FTSE-250 listed Flybe's share price charted over the last three years

Half-year results: Half-year results published today reveal that the airline's pre-tax profits fell by 54 per cent to £7.4million

Revenues fell by 10 per cent to £409.2million after the airline cut capacity by 9 per cent. Passenger numbers edged up 0.6 per cent to 5.2million.

A the end of September, the airline had 78 planes in its fleet, compared to the 80 it had in March.

Chief executive Christine Ourmieres-Widener said the group continued to see improvements in the third quarte, adding that cost savings had already helped to drive progress in boosting profits.

But she added: 'There has been a recent softening in growth in the short-haul market, as well as continued headwinds from higher fuel and currency costs.

'We are responding to this by reviewing every aspect of our business, especially further capacity reduction, cash management and cost savings.'

Bankers at Evercore have been brought in to handle the talks about a potential deal.

Neil Wilson, chief market analyst at Markets.com, said that while the higher fuel costs and weak pound had pushed FlyBe to the current situation, 'it has been for some time a zombie airline.'

He added: 'There are more of them and we see this as simply the latest domino to fall in the European short haul airline sector. There will be more to come, although some temporary reprieve perhaps if oil continues to fall'.

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